STHM 1113 Lecture Notes - Lecture 4: Stock Market, Washington Mutual, Industrial Revolution
6 May 2018
School
Department
Course
Professor
• Economic Expansion
o Economy is growing and consumers are spending money
o Present U.S. Economy
• Economic Contraction
o Spending declines, layoffs, economy slows down
o 2008 The Great Recession
• Economic Cycles
o Inflation
▪ Condition characterized by continuing rise in prices
▪ Ex. Venezuela – citizens cannot afford basic goods
o Recession
▪ Decline in production, employment, and income
▪ Last recession was in 2008 – collapse of housing and much more
o Depression
▪ Unemployment very high; consumer spending low; business output
sharply reduced
▪ 93’s last depression
o Unemployment
▪ % of population that wants to work but unable to find jobs; also 2008
• How we measure the health of an economy?
o How do we know if it is in good shape or bad shape?
▪ Ans. We look at key indicators, such as:
o Employment/Unemployment rate – how many people are working or out of
work? Are companies hiring?
o 4.3% as of May 2017; compare to 2009/10 = 9.7%; very difficult years for recent
college grads too!
o Gross Domestic Product – the nation’s output of goods & services produced in a
year
o Reporting on a quarterly basis (every three months)
• The 2008-2009 Recession
o The worst recession since the Great Depression
o Collapse of many financial institutions
▪ AIG, Bear Stearns, Washington Mutual, & Merrill Lynch
o Stock market dropped 50%
o Highest mortgage default rate in history
o Unemployment reached 10% by late 2009
o Personal savings rates increased
o Government spent $750 billion on financial institutions, and $789 billion on an
economic stimulus package
• A Brief History of the U.S. Economy
o The early economy
o The industrial revolution
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